What Democratic control of the Legislature means for your car-tab fees

Relief from car-tab fees increased to fund the Sound Transit 3 package might be coming for some drivers now that Democrats control both chambers of Washington’s Legislature — just not as much as the GOP, and probably many drivers, had hoped.

The two parties fought last year, when the GOP controlled the Senate, over how far to reduce fees that shot up to pay for the $54 billion package approved by voters in 2016. The end result? They did nothing.

Democrats now own voting majorities in both chambers thanks to a recent special-election victory in Seattle’s Eastside Suburbs. That likely paves the way for the party’s modest plan to change car-tab fees. Sen. Marko Liias, D-Lynwood, described the plan as a “middle ground.” Lawmakers will convene in January for a 60-day session.

Democrats fear cutting the charges too much would hobble Sound Transit’s ability to complete projects promised to voters in time. That includes extending the light-rail line from SeaTac to Tacoma by 2030.

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“I expect that relatively early in session we’re going to take action to provide relief to taxpayers,” Liias said.

The plan doesn’t go far enough for some.

Republicans want a greater tax cut for voters surprised at how much they’re paying for car tabs due to Sound Transit using an older formula from the 1990s to estimate the value of vehicles.

The older formula overestimates a vehicles value during its first 10 years of life, inflating fees for some.

Some lawmakers expected Sound Transit would use a more accurate replacement approved by the Legislature in 2006. Sound Transit planned to use the older method through 2028, when bonds from older transit projects are retired, before switching to the newer formula.

Democrats hope to more or less revert to the 2006 formula.

A bill sponsored by Rep. Mike Pellicciotti, D-Federal Way, would give people refunds or credits for the difference between what they’re being charged now and what their car-tab fees would have been under the 2006 formula.

Liias said the bill will likely fly through the Legislature. It also won’t significantly disturb Sound Transit’s ability to complete its projects on time, he said. Liias was a key negotiator on the issue for Democrats.

Even the middle-ground approach takes a bite out of Sound Transit’s budget.

Geoff Patrick, a spokesman for the agency, estimated Pellicciotti’s bill would cost Sound Transit roughly $800 million in direct revenue, ultimately putting the agency in a $2.2 billion hole because it couldn’t raise as much money through bonds.

The Sound Transit 3 ballot measure is expected to raise about $28 billion in revenue through a combination of increased sales taxes, car-tab fees and property tax hikes over the next 25 years.

That money would pay to extend light rail from Tacoma to Everett, while improving commuter rail and bus service throughout the Puget Sound region.

The plan the GOP angled for would have drained even more cash from Sound Transit. It also would have provided a bigger tax break.

Republicans last year wanted car-tab fees based on vehicle values as determined by Kelley Blue Book or the National Automobile Dealers Association, whichever was lower.

Patrick said that plan would cost Sound Transit $6 billion in direct revenue and about $12 billion in overall cash because of a loss of bonding capacity.

After the initial proposal, Senate Republicans later took an even more dramatic approach by amending their plan to cut Sound Transit’s car-tab fee collections roughly in half.

State Rep. J.T. Wilcox, R-Yelm, said Republicans still hope to offer amendments to “strengthen” the Democratic car-tab package “so that people are really able to recover the full amount” they paid through the older vehicle valuation formula.

He also said he would prefer residents in Pierce County get a re-vote on the Sound Transit 3 package since “most voters didn’t understand the full fiscal impact to them.” That proposition is extremely unlikely given Democratic control of the Legislature.

Sound Transit 3 got a majority of votes in its three-county taxing district. In Pierce County, most voted against it.

A GOP-led committee investigation concluded in October that Sound Transit misled voters about the size and details of the $54 billion transit package. Committee leaders claimed Sound Transit concealed how the agency would estimate vehicle value.

Sound Transit denies those claims, saying controversial elements of the package, including car-tab fee calculation, were openly debated and widely known. The committee investigation was attacked by Democrats as a partisan affair.

Patrick said Sound Transit understands “there’s concern” about the car-tab calculation method. He said the agency prefers no change to the status quo but said if a bill does pass he hopes the Legislature offsets any loss of car-tab revenue with other new money or by helping Sound Transit reduce costs.

Patrick said even the $2.2 billion hit from Pellicciotti’s bill would hurt Sound Transit’s ability to finish projects on time if the money is not replaced in some way.

How individual projects would be affected is still unclear and might vary based on location, Patrick said.

Key Democratic leaders appear ready to support a change. Giving rebates or credits based on the 2006 vehicle formula seems the likely finish to the car-tab saga.

Democrats in the House passed Pellicciotti’s bill multiple times last year, and Rep. Judy Clibborn, D-Mercer Island, said they’re likely to do so again. Clibborn chairs the House Transportation Committee.